In 1709 (or was it 1710?) the Statute of Anne created the first purpose-built copyright law. This blog, founded just 300 short and unextended years later, is dedicated to all things copyright, warts and all. To contact the 1709 Blog, email Eleonora at eleonorarosati[at]gmail.com

Monday, 21 September 2015

Distribution right encompasses advertisement for sale of copyright works, says the CJEU

Nedim Malovic

A few months ago the Court of Justice of the European Union (CJEU)
issued a very interesting and definitely important decision concerning whether
mere advertisement for sale of copyright-protected works falls within the scope
of the right of distribution as per Article 4 of the InfoSoc Directive.

The decision in Dimensione Direct Sales
and Michele Labianca v Knoll International, C-516/13 (Labianca) was
noted by the IPKat here, but not by this very blog.

Thankfully talented IP enthusiast Nedim Malovic (Stockholm
University) has come to our rescue with this thoughtful note that will be also
published in the Journal of Intellectual Property Law & Practice soon.

Here's what Nedim writes:

"This reference
for a preliminary ruling arose from a dispute between two Italian companies,
Dimensione Direct Sales (Dimensione) and Knoll International SpA (Knoll). Knoll
manufactured furniture - including chairs,
stools, couches and tables - to which it also held the copyright, and sold it
globally. Dimensione traded in furniture and distributed it around Europe, also
offering it for sale on its website.

Knoll brought
proceedings before a German court, claiming that the items offered for sale by
Dimensione were counterfeit versions of its protected designs. Following
Knoll’s victory at both first instance and in appeal, the Bundesgerichtshof
(the German Federal Court of Justice) decided to refer a number of questions to
the CJEU, these being whether: (1) the distribution right under
Article 4(1) of Directive 2001/29 (the InfoSoc Directive) would include
the right to offer the original or copies of a work to the public for sale and,
if so, (2) the right to offer the original or copies of a work to the public
for sale would include not only contractual offers, but also advertising
measures; (3) the distribution right may be infringed even if no purchase of
the original or copies of the work takes place on the basis of such offer.

Not just beautiful:Knoll's Wassily chair,one of the pieces of "high-value furniture"at the centre of the national litigation ...

The CJEU
response

The CJEU answered all
the three questions in the affirmative, finding that Article 4(1) of the
InfoSoc Directive allows the copyright holder to distribute a protected work
and prevent an offer for sale or a targeted advertisement of the original or a
copy of that work.

This is the case even
if it is not established that the advertisement in question gives rise to the
purchase of the original or a copy of the copyright work by a buyer. It
suffices that the advertisement invites a consumer to purchase it. The CJEU
supported this reasoning on the basis of its previous judgments in Donner[here], and Blomqvist[here], in which it had held that the
distribution to the public is characterised by a series of acts going, at
the very least, from the conclusion of a contract of sale to the
performance thereof by delivery to a member of the public.

According to the
Court, use of the phrase "at the very
least" in those judgments means that “it is not excluded that the
acts or steps preceding the conclusion of a contract of sale may also fall
within the concept of distribution and be reserved, exclusively, to the holders
of copyright.” (para 26)

It
follows that even an invitation to submit an offer, or a non-binding
advertisement for a protected object may be considered as falling under the
scope of Article 4(1). As such, "[t]here
may be an infringement of the exclusive distribution right, under
Article 4(1) of [the InfoSoc Directive], where a trader, who does not hold
the copyright, sells protected works or copies thereof and addresses an
advertisement, through its website, by direct mail or in the press, to
consumers located in the territory of the Member State in which those works are
protected in order to invite them to purchase it.” (para 31)

To
this end, “it is irrelevant, for a finding of an infringement of the
distribution right, that such advertising is not followed by the transfer of
ownership of the protected work or a copy thereof to the purchaser." (para
32).

... also makes a comfortable seat(dog not referred to CJEU though)

The Court noted that
this approach could be seen as a departure from its previous ruling in Cassina[here],in which it held that
the distribution to the public only takes place where there is a transfer of
the ownership of that object (paras 33, 36 and 41). However, similarly to what
Advocate General Cruz Villalón held in his Opinion in Labianca (para
32) [here], the CJEU stressed how the
particular outcome in that case was justified in light of its peculiar factual
background, which consisted of displaying in public unauthorised reproductions
of copyright works. In the case at hand, instead, Dimensione made unequivocally clear its intention
to market the alleged infringing furniture. Even if no sale or actual delivery
of infringing goods actually occurred, the fact that the consumers
were invited, by targeted advertising, to acquire ownership of the original or
copy of the work in question, would suffice to trigger application of Article
4(1).

What does this ruling mean?

Without the need for
an actual sale to have an act of distribution, although seemingly in line with
earlier rulings in Donner and Blomqvist, this CJEU
decision appears to have extended the scope of the distribution right, up to
the point of potentially blurring (further) the distinction between acts of
distribution and acts of communication/making available to the public, the
latter as per Article 3 of the InfoSoc Directive. The implications of this
remain to be seen.

What however seems
clearer is that this judgment may have made an (additional) aspect of UK
copyright incompatible with EU law. Section 18 of the Copyright, Designs and
Patents Act 1988 defines the distribution right as the “right to issue” to the
public copies of a protected work, ie putting into circulation
in the European Economic Area copies of such work not previously put into
circulation therein. There seems to be consensus that the act of offering or exposing copies for sale could
not be considered as akin to putting copies into circulation. As such, UK
distribution right currently appears narrower in scope than its InfoSoc
counterpart. Whether this is acceptable may be doubtful following this latest
CJEU instalment on Article 4(1) of the InfoSoc Directive."

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